Energy price hike sees datacentre pricing-model revision

Computing

Recently the National Energy Regulator of South Africa (NERSA) granted power utility Eskom an 8% average increase per annum over the next five years. Lex van Wyk, chief executive officer of Teraco Data Environments says that with five years of power increases above CPI already weathered, and an estimated 50% of an organisation’s power usage expended on IT resources alone, the hike places immense pressure on South African business, specifically with regards to IT strategies.

“Many South Africans will breathe a short sigh of relief that the proposed 16% hike was not approved, but the relief is short-lived with the lower than anticipated 8% increase in 2013. The reintroduction of rolling blackouts, the lack of maintenance and planning and the shortfall in South African energy is top of mind and threatens business feasibility and employment in general,” says van Wyk.

Electricity prices in South Africa have increased by more than 170% in the past five years, whilst prices in other BRIC countries (Brazil, Russia, India, and China) have decreased by more than 36% in the past decade. With mounting pressure on the power grid in South Africa, the reintroduction of load shedding comes as no surprise.

Van Wyk says that seeking alternative energy solutions isn’t always the answer. He quotes the almost 100% increase in the Diesel price over a 4 year period, which would affect those looking to consider generator power. He says that Teraco Data Environments are geared to withstand power grid issues through substantial generator backup power, but the increasing price of Diesel makes this an expensive solution.

Van Wyk says that the choice of data centre colocation over organisational self-provisioning is a strategy that needs to be considered at the highest levels. “Power is a scarce and expensive resource and by managing it carefully in a larger environment one can get the benefits derived from economies of scale.  With the correct focus and tools there are also advantages in managing the power supply all the way to server-cabinet level.”

Power usage effectiveness (PUE) is a measure of how efficiently a data centre environment uses its power and more specifically, how much of the power is used by the computing equipment.  “With a keen eye on efficiencies, alongside investments in power efficient technologies, elements like cooling, virtualisation and colocation all become contributors to economies of scale.

Guy Willner, International Data Centre Group (IDC-G) founder,  co-founder of IXcellerate Datacentre Moscow, winner of the DatacentreDynamics Business Leader of the Year 2012 and Teraco board member reiterates that power is the real cost in the data centre. “Internationally, over the last decade we’ve seen the pricing model for colocation data centres change almost completely from a footprint model to that of power. Floor space is now almost completely irrelevant and power and it's guaranteed availability is the ultimate commodity traded.”

 Willner continues on to say that in South African data centres, the pricing model offered by many colocation providers is still that of space with free unmetered power. “Given the increases over the past five years and the expected rolling blackouts, this model is unlikely to be financially sustainable. The Eskom crisis will force data centre operators to revise their models in order to stay afloat.”

“Infrastructure sharing, connectivity and efficient power management are all critical ingredients in building a competitive IT industry in South Africa. Outsourcing of data centres still provides a substantial saving on operational and capex expenditure, and might be one of the only solutions to combat the continued price increases,” concludes van Wyk.